Global industrial services provider Cape plc has taken a $250 million hit from its Australian operations and slashed overheads after losing ground in the resources sector.
Cape said in annual results released yesterday that its mostly WA-based onshore business had deteriorated sharply, with reduced volumes and falling margins as demand fell from both the mining and oil and gas sectors.
The listed British company said the operations had undergone a drastic restructure to cut costs, strengthen management and focus on core activities. Scaffolding businesses in Perth and Melbourne had been put up for sale, along with a WA blasting and painting workshop.
The calendar 2012 results saw Cape record ï¿½173 million ($253 million) in charges against its Australian operations. That included a ï¿½111 million goodwill impairment and a Â£44 million charge for discontinued operations.
The exceptional items led to a loss before tax of Â£140 million, compared with a Â£62 million profit the year before when Australia was a top contributor.
Chief executive Joe Oatley pinpointed the completion of work on Woodside's Pluto LNG project a year ago as the beginning of Cape's troubles. "With delays in contract awards for the forthcoming LNG projects and cutbacks in the mining capital investment program, operating performance was affected both by falling volumes and margin reduction in a very competitive market," he said.
"An overhead cost reduction program was instigated, which partly mitigated the effects of these pressures, but the business has still performed poorly for the year as a whole."
He said bad performances in Australia and at an Algerian project had highlighted operational and control weaknesses. "We have conducted a root-and-branch review of our balance sheets across the group to ensure any issues are identified and that all of our assets are appropriately and more prudently valued."
Most of the devalued assets were part of the PCH Group, which Cape bought in 2007 for $247 million. Bibra Lake-based Shoreguard Marine was acquired in 2011.Mr Oatley said the Australian market continued to be subdued in the short term but business was expected to pick up when LNG projects moved forward.
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